Author Topic: What to do with a mess?  (Read 2932 times)

Soni

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What to do with a mess?
« on: May 28, 2013, 07:25:22 AM »
I've had two major life changes occur in the last three months. First is my father passed away on Valentines Day which comes with it's own bizarre real estate complications. Second is I started a new job (posted in the general section).

My father passing has been extremely difficult on a personal level and mind blowing in how anit-mustachian he lived. When he passed he left behind about $1million in debt mostly to unsecured private parties and practically $0 in assets. Luckily non of his mess is falling in my lap thanks to a close family friend who's the executor. Except this one thing. A house. A 5-plex apartment building. About 6 years ago I owned it and sold it to him. Signed the deed over and left the country, he took over management but never refinanced into his name and took a second on the house. We we're in the process of clearing all this up when he passed. So, I own the mortgage $95k. His estate owns the title with a second for $50k tied to it. We're not sure if probate will let me have the title or if they will sell the house to pay of some of the other creditors. The house is worth about $180k, there's $145k in loans once legal fees are included, there wont be much to pay creditors with. More than likely, I'll get the title and assume the whole $145k in loans. Now, I'm fortunate because  the bank (a small local one) wants me to have the house and so does the second. they are both willing to bend over backwards to make that happen. The bank is ready to refinance and the second is willing to discount her $50k to whatever the bank will refinance for. The house cash flows with a gross monthly income of $3500 with about $500 extra even after the current management company takes it's cut. I'm not sure what kind of advice I'm even asking for, but I would like to hear your thoughts.

Oh, and to ad a little extra grease to this, about two weeks ago I got a call that a distant uncle has passed and that there's $100k heading my way in the next year when his wife passes. it would have gone to my dad, but since he just passed, it would be coming to me. My thought is to put it all into paying off the house.

I'm not sure what kind of advice I'm even asking for, but I would like to hear your thoughts.

Thanks in advance for any ideas that come,
Jason

aj_yooper

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Re: What to do with a mess?
« Reply #1 on: May 28, 2013, 07:39:00 AM »
Do you have an experienced real estate attorney working for you?  Protect your self first.


Self-employed-swami

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Re: What to do with a mess?
« Reply #2 on: May 28, 2013, 07:46:06 AM »
I'm so sorry to hear about the loss of your Father.

When my Mom died 5.5 years ago, she left behind such a mess, that it took 2 lawyers and an accountant, over 4 years to sort it all out.

I also would recommend that you make sure you've got a good lawyer working on things.  (I can't imagine that the other creditors, would allow you to 'walk away' with $40,000 in assets, even if the lenders on the notes for the building want you to have it).  I thought all assets had to be liquidated, to pay outstanding debts in an estate, before anything could become inheritable, but I'm in Canada, so the laws might be different there.

Take your time with grief, it can be overwhelming at unexpected times too.


smedleyb

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Re: What to do with a mess?
« Reply #3 on: May 28, 2013, 11:52:32 AM »
Truly sorry for your loss Soni.  I wish you the best.

Just curious, but would you be willing to expand a little on "he left behind about $1million in debt mostly to unsecured private parties and practically $0 in assets."  Who are these "private parties?"  I'm wondering if you feel responsible for paying back any of his debts? (for example, say he owed money to a mutually close family member).   Defaulting on a line of credit from Bank of America is one thing; it's quite another to owe Aunt Betty $75,000.  That might be something that blows-back on you (not just financially, but emotionally and ethically).

 

Self-employed-swami

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Re: What to do with a mess?
« Reply #4 on: May 28, 2013, 11:59:34 AM »
I'm sorry, but if my Mom had owned anyone, any amount of money that the estate couldn't have paid, I wouldn't have coughed up any cash.  I can understand feeling bad, if your Dad owed a family member a lot of money, but I seriously wouldn't repay that myself.

Coneal

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Re: What to do with a mess?
« Reply #5 on: May 28, 2013, 05:25:39 PM »
Let me throw out a couple of things that occured with a rental when my dad passed away.  Since you have experience with landlording in the past you maybe aware of how big of a pain in the ass it is.

A couple of months after he passed the tennats started demanding how their were certain deals in place regarding the rent and we should abide by them.  They tried to make me feel like shit but really they were trying to take advantage of my dad passing.

My dad had alot of verbal agreements with people and none of them were kept when it was brought to my attention.  This will go on throughout the year.  About every month or so there would be a new suprise.

Once probate is finished the debts are gone you start with a clean slate.  Do not try to make everyone happy.  When you do this your putting everyone elses needs before yours.  If the debt was not disclosed in probate and settled they lost their chance of recovery. 

If your holding the property b/c it feels sedemental and a connection with your dad this is the wrong way to think.  Your dads value to you is with the memories and fun times the little things will become of more value.  Property is property.  I still have one of the properties but b/c its making money not b/c of the sedimental value.

It took a year to finally get my footing on everything and running smoothly.  Some people will understand that your not at the top of your game b/c not only are you dealing with his loss but your also trying to figure all this out and get to a happy place.  There will also be people out there theat try to tright out screw you b/c they know your week during this period.

Try not to do anything with cash for the first year.  Give yourself time to heal b/c people do not make good decisions under stress. 

My dad and I use to have discussions about what should be done once he passed and think it would be useful in your case.  This helped me get through alot of the headaches.

"When I die I really don't care what happens to the place.  I just didn't want to sell it b/c it was important to me.  While I would like you to keep the place, if possible.  The number one thing, I do not want it to be a financial burden and put you in a bad spot.  These are just a bunch of old building in the end"


TrulyStashin

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Re: What to do with a mess?
« Reply #6 on: May 29, 2013, 07:57:31 AM »
I'm an attorney and can't echo loudly enough the prior postings advising you to get a good lawyer.  Even the sharpest business person doesn't know about wrinkles in the law, or recent developments, that can turn what appears to be a good settlement/ arrangement with the creditors into an extended nightmare.  A good attorney can also do much of the hard-nosed negotiating and all of the rational thinking for you -- both of which are hard to do when you're grieving.

I suggest you search for the local bar association in the city/ county where the property is located (example, in Richmond, VA you'd search for the Richmond Bar Association).  While all attorneys have to be members of the state bar ("admitted") in order to practice in their state, belonging to the local bar association is optional.  Typically attorneys who choose to join their local association are especially civic-minded and/ or dedicated to their professional development.  The association will have an attorney referral service that will provide you with names.  Pick three and interview each one before deciding who to hire.  They may require a retainer which is what they will pull from as they work on your case -- this is normal and negotiable.

MMM distinguishes between being cheap and being frugal.  Cheap people won't shell out money even when they really need to.  Frugal people are careful and smart with their money, but when they need to spend it in order to handle a situation that is beyond their knowledge, they will spend it.  Be frugal, not cheap.

I'm so sorry life is upside down for you right now.  Let me know if you have questions.  Happy to answer them.